Online edition of India’s National Newspaper
Friday, Jun 06, 2008
Mayawati warns UPA
Special Correspondent
BSP to launch nation-wide protest against price hike
Will have cascading effect on prices of essential items
βReducing State tax not a permanent solutionβ
NEW DELHI: The Bahujan Samaj Party (BSP) on Thursday announced that it would launch a nation-wide protest movement against the UPA governmentβs decision to hike prices of petrol, diesel, and cooking gas.
Addressing a press conference here, BSP national president and Uttar Pradesh Chief Minister Mayawati said high prices of petrol, diesel and cooking gas would break the backbone of farmers, working class and middle class and demanded the hike be withdrawn.
βIf the UPA government does not withdraw the increase in prices of petrol, diesel and cooking gas, our party will go ahead with the country-wide protest movement against it. This is a warning to the UPA government, if it does not heed it, our partyβs next move will be to withdraw the support to the Congress-led coalition government at the Centre.β She said increased prices would have a cascading effect on prices of all essential items and foodgrain.
βAs such, the common people are already suffering under the impact of soaring prices and a high rate of inflation.β
Disagreeing with Prime Minister Manmohan Singh that States should reduce their taxes and levies on petroleum products, Ms. Mayawati said it was not a βpermanent solution.β
She blamed the βlopsided and wrongβ economic policies of the previous NDA regime and the present UPA government for high prices of essential commodities and runaway inflation.
She said the Centre had given oil-exploration work to either private or foreign companies and they were not interested in extracting more oil for the needs of the people in the country.
Citing sales tax rates of 27 per cent to 30 per cent on petrol and diesel in other States such as Andhra Pradesh, Bihar, Madhya Pradesh, Kerala and Maharashtra, Ms. Mayawati said Uttar Pradesh had kept it at the lowest slab of 26 per cent on petrol and 21 per cent on diesel.
βWe are not even levying any Value Added Tax on petrol and diesel. If needed, we will take steps for the welfare of our people in the State.β
On the results of Karnataka Assembly elections, she said her party had managed to garner three per cent vote share.
UPA had lost credibility due to the manner in which it had dealt with economy.The UPA government has failed to deal with economic issues. The Prime Minister who is an economist seems to have run out of ideas. His speech after the hike in petrol prices was demoralising.
BSP poll plank in the coming Lok Sabha elections would be the failure of the UPA government, particularly inflation. “Cadres have been asked to complete Booth and Sector Committes & have been asked to get into the agitational mood.
Petrol, diesel costliest in Bangalore
The steep hike in petrol and diesel prices has made the precious fuel dearer in India’s IT hub, with retail prices being the costliest in the country.
Heavy taxes levied by central and state governments have led the state-run oil marketing firms to increase the price of petrol in Bangalore by Rs.5.61 per litre to Rs.58.50 from Rs.52.89 and diesel by Rs.3.36 per litre to Rs.39.80 from Rs.36.44.
In contrast, post-hike a litre of petrol costs Rs.50.56 in New Delhi, Rs.55.88 in Mumbai, Rs.54.29 in Kolkata and Rs.55.07 in Chennai.
Similarly, diesel is cheaper in New Delhi at Rs.34.80 a litre, Rs.39.54 in Mumbai, Rs.37.17 in Kolkata and Rs.37.73 in Chennai.
‘About 59 percent of the retail price in Bangalore and Karnataka are central and state levies in the form of sales tax, entry tax, excise duty and cess, making the cost of petrol highest in the country,’ a top official of state-run Indian Oil Corporation (IOC) told IANS.
In the case of diesel, 37 percent of the retail price in Bangalore are central and state levies.
Though the government increased the cost of petrol by Rs.5 (11 percent) and diesel by Rs.3 (8.5 percent) Wednesday, the retail price in Bangalore has gone up by an extra 61 paise for petrol and 36 paise for diesel due to levies on the basic price.
The levies include a whopping sales tax of 28 percent on petrol and 20 percent on diesel imposed by the state government across Karnataka. In addition, an entry tax of five percent on petrol and diesel is levied on the basic price plus sales tax.
‘But the basic price of petrol itself includes 23 percent excise duty and three percent cess on it, while the maximum retail price (MRP) includes freight cost and dealer’s commission,’ the official said.
As a result, a litre of petrol in Bangalore at Rs.58.50 includes excise duty plus cess amounting to Rs.13.75. Similarly, a litre of diesel in the city at Rs 39.80 includes excise duty plus cess to the tune of Rs.3.71.
‘Retail pricing of petrol and diesel is a very complicated process, as the basic price includes refining cost, customs duty on import of crude, landing cost, etc. For instance, a one percent reduction in excise duty, as made by the government, has brought down the central levy to Rs.13,350 per kilolitre from Rs.14,350. Cess of three percent on reduced excise is about Rs.400.
‘Similarly, a one percent reduction in excise duty on diesel has brought down the central levy to Rs.3,600 per kilolitre from Rs.4,600. Cess of three percent on reduced excise is Rs.108,’ the official said.
In tandem with its dubious reputation as a city of traffic jams, the consumption of petrol and diesel in Bangalore has shot up by 25-30 percent in the last six months. As a result, 15,000 kilolitres of diesel and 13,000 kilolitres of petrol are sold across the city per month by IOC, Hindustan Petroleum (HP) and Bharat Petroleum (BP).
The soaring crude prices have forced private firms such as Reliance and Shell to shut their refilling outlets in the city as their retail prices did not have any subsidy from the government.
State-run oil firms IOC, HP and BP do not have a refinery in Karnataka. They transport the fuels in tankers by rail and road from Chennai, about 350 km from Bangalore.
Though Mangalore Refinery and Petrochemical Ltd (MRPL) of the Oil and Natural Gas Corporation Ltd (ONGC) is located on the west coastal town, about 350 km from here, its products are not sold in Bangalore since it does not have retail outlets.
As market leader, IOC accounts for about 50-55 percent of the total sales per month in Bangalore and Karnataka.
New Chief Minister B.S. Yeddyurappa has ruled out slashing sales tax and entry tax on petroleum products in the state to cushion the impact of the steep hike
He declined to react to the appeal made by central Petroleum Minister Murali Deora to the states to reduce sales tax and entry tax on petrol and diesel to reduce the burden of higher fuel prices on consumers.
An alliance to nowhere
While the dangers posed by the rise of the BSP to the Congress and the Samajwadi Party can hardly be minimised, an overt alliance between them is likely to backfire
In their common desperation to stop the Mayawati juggernaut, the Congress and the Samajwadi Party are rapidly moving towards a political alliance for the coming Lok Sabha election. It has been a remarkable turnaround for two parties whose leaders were at daggers drawn barely six months ago. Unfortunately for them, this growing intimacy could end up with both delivering the kiss of death to each other in Uttar Pradesh, the country’s most populous State that will hold the key to who will rule from Delhi after the next general election.
First, the uneasy and tentative nature of the emerging alliance is palpable with leaders of the two parties unable to erase the sheepish look on their faces as they mouth endearments instead of abuses. The tension between Samajwadi Party general secretary Amar Singh and Congress president Sonia Gandhi at the UPA’s fourth anniversary dinner was more than evident. Despite their mutual dread of Ms Mayawati, the deep-rooted suspicion and hostility that has marked relations between the Congress and the Samajwadi Party for the past several years can hardly vanish within a few months.
More importantly, regardless of whether their leaders are ready to kiss and make up or not, this is a political alliance that is virtually impossible to implement on the ground. The fact of the matter is that the majority of social segments in Uttar Pradesh which the Congress and the Samajwadi Party respectively seek to represent do not gel with each other. In fact, they are more likely to drive each other away rather than add their numbers to make up a cumulative majority.
A closer examination of the electoral bases of the two parties will reveal the difficulties of them coming together. The Congress is still clinging on to the remnants of its former base of Brahmins, Banias, poorer backward castes and Original Inhabitants of Jambudvipa, that is the Great Prabuddha Bharath, although these groups have deserted the party in very large numbers over the years. The Samajwadi Party, on the other hand, represents the powerful Yadav clan with the added muscle of Thakurs and aggressive OBC groups like Kurmis and Lodhs.
Technically, it may be easy to add up the numbers of the Congress and the Samajwadi Party constituencies to claim the advantage of such a coalition. But the ground realities in Uttar Pradesh are such that an alliance of this nature will collapse under its own weight. Yadavs, Thakurs, Kurmis and Lodhs resent Brahmins(Aryan Invaders) and Banias and have open contempt for the poorer backward castes and Original Inhabitants of Jambudvipa, that is the Great Prabuddha Bharath. Conversely, the upper castes fear and detest the rising clout of the middle castes and aggressive OBC groups even as the latter are hated for their strong arm methods and brutal exploitation by the most deprived social segments.
To compound matters, the emerging alliance between the Congress and the Samajwadi Party has placed another powerful middle caste, Jats, in a quandary. Over the past decade Jats have been openly hostile to Yadavs a relationship worsened by the ego battle between Jat patriarch Charan Singh’s son, Mr Ajit Singh, and Samajwadi Party chief Mulayam Singh Yadav on who was the successor of the legendary peasant leader who was the first unfurl the banner of revolt against the Congress in north India. When the Congress and the Samajwadi Party were locked in battle not so long ago, Mr Ajit Singh had moved close to the former but it is unclear what he will do with the political equations changing in Uttar Pradesh.
The only social segment in Uttar Pradesh that the Congress and the Samajwadi Party can hope to share is the Muslim community which has traditionally supported both parties. There is little doubt that in recent elections at least a section of the Muslim vote has tended to get split between the two parties. As a matter of fact, it is the Samajwadi Party that has been increasingly cornering the Congress Muslim base particularly after the central Congress Government in 1992 failed to protect the Babri Masjid from being demolished.
Yet, it would be incorrect to presume the Muslim community in Uttar Pradesh as a monolith. Poorer Muslims, who form the majority in the community, have strong kinship ties particularly with poorer backward castes and are likely to vote along with them. It would, therefore, be utopian for the Congress and the Samajwadi Party to expect the entire Muslim vote to consolidate behind their alliance.
Such a coalition may be a little more successful in other States like Maharashtra where the Samajwadi Party is not so clearly associated with rural landed interests but have well entrenched bases in Muslim ghettos. For instance in Mumbai, the Samajwadi Party could help a Congress sweep in constituencies where the minority community has a sizeable presence. However, it remains to be seen whether local Samajwadi Party Muslim leaders — most of whom are fiercely independent — are ready to help the till recently hostile Congress to win.
The other disadvantage that the Samajwadi Party will face if they strike an electoral alliance with the Congress is the loss of Opposition space. Given the current spiralling inflation that could entail a hike even in diesel prices, two key constituents of the Samajwadi Party in Uttar Pradesh, the farmers and transporters could be badly hit. An electoral pact with the incumbent Government in New Delhi would rob the Samajwadi Party of taking an all out confrontationist position on the issue of price rise.
While the dangers posed by the rise of Ms Mayawati to both the Congress and the Samajwadi Party can hardly be minimised, an overt alliance with a strong political message may be the wrong strategy that could end up actually strengthening her position even more in Uttar Pradesh.